ITC’s cigarette business is back.
India’s ITC Ltd. reported a 13.6% increase year-on-year in net revenue for its cigarette business to INR6.44 billion (US$854.7 million) for the quarter ended December 2021 (Q3 FY2022) along with a 12% cigarette sales volume increase, bringing it back to pre-pandemic levels.
The cigarette segment contributed 35% of ITC’s overall revenue in the quarter. The company also reported a 14% increase in cigarette earnings before interest and taxes (EBIT) to INR 3.95 billion (US$524.23 million), its highest-ever in a quarter.
ITC indicated that the growth its cigarettes segment saw was due to robust recovery across markets aided by an increase in mobility and agile supply chain and market servicing. Another contributing factory was the introduction of several new products and variants of existing ones.
Prior to this, ITC continued to see cigarette sales volumes drop since Q4 FY2020 (January-March 2021). In Q4 FY2020 it dropped by 11% year-on-year. Q1 FY2021 saw the largest drop at 37%, followed by a 12% and 7% drop in Q2 and Q3 FY2021, respectively. However, the tide started to turn in Q4 FY2021 when cigarette sales volume increased by 7%, followed by a 31% growth in Q1 and 9% in Q2 FY2022.